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They're not saying "you give us some of your compensation back", they're saying "your future compensation will be less than you expected." It's kinda like if s

by harryh 15y ago

They're not saying "you give us some of your compensation back", they're saying "your future compensation will be less than you expected." It's kinda like if someone gets you to join their company by offering to pay you 100k/year, but then 6 months in drops your pay to 50k/yr. And really it's not even that. It's "you got hired at 100k/yr, but then the company was WILDLY SUCCESSFUL and you then expected to make 10M over the next year but they're dropping your pay to 1M for that year" Skeezy? Definitely to some degree. Theft/Illegal? I don't think so.

nirvana 15y ago
Actually, it is theft. The grant is a commitment to issue the equity on the vesting schedule. Attempting to change that schedule is attempting to deny employees the compensation they are morally due. If the employee continues to do the work he promised to do at the time of the grant, firing him, or attempting to renegotiate, simply to get the stock back is a form of theft. You can't just hire someone at $100k a year and then decide you want to pay them less, at least not without risking a losing a lawsuit.
smokinn 15y ago
The difference between a pay cut and a stock restriction is that pay is regular and vesting is not. Let's say you renegotiate down 50% like you suggested. That means from now on you make 50% and before you made 100%. A vesting schedule though almost always accelerates towards the end. So if you renegotiate down 50% towards the end you may in fact be likely losing 75% or more. That's the problem with renegotiating stock grants/options, you likely still have a large amount left unvested and you put in all the hours and work beforehand with the promise that loyalty would be rewarded over time.
- harryh 15y ago
  > A vesting schedule though almost always accelerates towards the end. Really? That's hasn't been my experience. In every situation I've seen (or even heard of) vesting has been on a regular schedule with the exception of a cliff at the beginning of employment (generally 1 year). If the zynga situation involves people who have not yet reached their 1 year cliff the skeeziness factor would go WAY UP imho.
damoncali 15y ago
I would argue it is a breach of the initial options agreement (at least in spirit). Those shares were negotiated under a set of conditions- the stock was very risky, and as a result worth very little. Now that everything has turned out well, you can't go back and say, "Wait, I didn't think it would be worth this much - give it back.". Pincus wouldn't be going back after a failed venture and forking over huge amounts of cash to compensate for worthless stock, now, would he? The option price and amount was set previously, and should be honored as long as the employee is performing their duties reasonably. This is greed in it's simplest form.

by harryh 15y ago

nirvana 15y ago

Actually, it is theft. The grant is a commitment to issue the equity on the vesting schedule. Attempting to change that schedule is attempting to deny employees the compensation they are morally due. If the employee continues to do the work he promised to do at the time of the grant, firing him, or attempting to renegotiate, simply to get the stock back is a form of theft. You can't just hire someone at $100k a year and then decide you want to pay them less, at least not without risking a losing a lawsuit.

smokinn 15y ago

The difference between a pay cut and a stock restriction is that pay is regular and vesting is not. Let's say you renegotiate down 50% like you suggested. That means from now on you make 50% and before you made 100%. A vesting schedule though almost always accelerates towards the end. So if you renegotiate down 50% towards the end you may in fact be likely losing 75% or more. That's the problem with renegotiating stock grants/options, you likely still have a large amount left unvested and you put in all the hours and work beforehand with the promise that loyalty would be rewarded over time.

harryh 15y ago
> A vesting schedule though almost always accelerates towards the end. Really? That's hasn't been my experience. In every situation I've seen (or even heard of) vesting has been on a regular schedule with the exception of a cliff at the beginning of employment (generally 1 year). If the zynga situation involves people who have not yet reached their 1 year cliff the skeeziness factor would go WAY UP imho.

damoncali 15y ago

I would argue it is a breach of the initial options agreement (at least in spirit). Those shares were negotiated under a set of conditions- the stock was very risky, and as a result worth very little. Now that everything has turned out well, you can't go back and say, "Wait, I didn't think it would be worth this much - give it back.". Pincus wouldn't be going back after a failed venture and forking over huge amounts of cash to compensate for worthless stock, now, would he? The option price and amount was set previously, and should be honored as long as the employee is performing their duties reasonably. This is greed in it's simplest form.